Italian Prime Minister Matteo Renzi announced his cabinet has approved a multiyear plan that will lead to lower growth in the short term but enhance the potential of the euro zone's third largest economy.

To take an ax to Italy's unwieldy public spending, its prime minister has turned to former IMF veteran Carlo Cottarelli, who has vowed to scour everything from luxury cars for bureaucrats to film-festival subsidies.

Italian Prime Minister Matteo Renzi unveiled plans to make €10 billion in cuts to payroll taxes and a further €2.4 billion in business-tax cuts, his first effort to deliver on promises to overhaul Italy's sclerotic economy.

Matteo Renzi spoke of "haste and boldness" as primary attributes of his new government before a confidence vote, pledging that the Italian state would pay down all of its commercial arrears and focus on improving the country's schools.

The group representing foreign banks operating in Italy said it is pressing the government to slash taxes, red tape and legal uncertainty, saying its members will buy more of the country's government debt.

The mayor of Florence, Matteo Renzi, accepted the task of trying to form a new coalition government and promised rapid and ambitious action meant to win over potential partners and shake up the country.

Italian President Giorgio Napolitano signaled plans to give center-left leader Matteo Renzi the formal task of trying to form a government, summoning the Florence mayor to his office for a Monday meeting.

Italy's economy grew in the final three months of 2013 for the first time in 10 quarters, marking the formal end of a recession that, coupled with the hefty contraction of 2009, has slashed its gross domestic product by 9%.